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Thai paying 7% for a 25 year loan. Can she do better?

sidjameson
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AyG Platinum Member

AyG

Posted
Posted

The minimum retail rate for bank customers in good standing with Bangkok Bank is 8.125%. That makes 7% look good.

Braddockrd Senior Member

Braddockrd

Posted
Posted

What kind of question is that? The interest rate on a loan depends on a variety of factors. Some people pay up to 100% to loan sharks because they are not credit worthy.

micky plumb Rookie Member

micky plumb

Posted
Posted

My wife has just been given a home loan based upon her "salary" I pay her every month and my own overseas salary.

The loan period given was for 10 years.

Interest rate is:

1.75% for the first year.

MLR (7%ish) minus 1.85% for 2nd year

MLR minus 1.5% for 3rd to 10th year.

The loan was given by Bangkok Bank. Branch was Pattaya Nua, near to Dolphin Roundabout. The Manageress couldn't have been more helpul.

It could be worth renegotiating the loan perhaps.

Cheers

Anthony5 Platinum Member

Anthony5

Posted
Posted (edited)

My wife has just been given a home loan based upon her "salary" I pay her every month and my own overseas salary.

The loan period given was for 10 years.

Interest rate is:

1.75% for the first year.

MLR (7%ish) minus 1.85% for 2nd year

MLR minus 1.5% for 3rd to 10th year.

The loan was given by Bangkok Bank. Branch was Pattaya Nua, near to Dolphin Roundabout. The Manageress couldn't have been more helpul.

It could be worth renegotiating the loan perhaps.

Cheers

What you mean with 1,75% for the first year?

She pays only 1,75% per year for the mortgage and 5,15% for the second year ?

Hard to believe.

Edited by Anthony5
micky plumb Rookie Member

micky plumb

Posted
Posted

My wife has just been given a home loan based upon her "salary" I pay her every month and my own overseas salary.

The loan period given was for 10 years.

Interest rate is:

1.75% for the first year.

MLR (7%ish) minus 1.85% for 2nd year

MLR minus 1.5% for 3rd to 10th year.

The loan was given by Bangkok Bank. Branch was Pattaya Nua, near to Dolphin Roundabout. The Manageress couldn't have been more helpul.

It could be worth renegotiating the loan perhaps.

Cheers

What you mean with 1,75% for the first year?

She pays only 1,75% per year for the mortgage and 5,15% for the second year ?

Hard to believe.

I thought it was too much as well but those are the figures.

Anthony5 Platinum Member

Anthony5

Posted
Posted (edited)

My wife has just been given a home loan based upon her "salary" I pay her every month and my own overseas salary.

The loan period given was for 10 years.

Interest rate is:

1.75% for the first year.

MLR (7%ish) minus 1.85% for 2nd year

MLR minus 1.5% for 3rd to 10th year.

The loan was given by Bangkok Bank. Branch was Pattaya Nua, near to Dolphin Roundabout. The Manageress couldn't have been more helpul.

It could be worth renegotiating the loan perhaps.

Cheers

What you mean with 1,75% for the first year?

She pays only 1,75% per year for the mortgage and 5,15% for the second year ?

Hard to believe.

I thought it was too much as well but those are the figures.

Too much ??

Did you notice that I mentioned 1.75% and 5,15% PER ANNUM?

Since another poster mentions that the MLR from Bangkok bank is 8,125%, that looks more like they gave you free money.

Or do I misunderstand this ?

Edited by Anthony5
mortenaa Silver Member

mortenaa

Posted
Posted

The 1.75% rate is a "promotion" rate that most banks give when you a buy a house or a condo on a project. My friend got the same. I'm not sure wherever its the bank, or the customer that looses out in the end. Probably the customer.

7% is extortion anyway. If you buy a house on a 30 year plan, you will pay back the house at least two times.

Another problem with these kind of annuity mortgages is that the first few years, you are mostly just paying interests. Lets say after 5 years, you sell the house, and refinance the loan you will discover that you paid down only ~6% of the total balance, while you paid ~16% of the total installments. Thats why I always recommend people to do serial loans rather than annuity loans. Well, the installments are higher in the beginning, but after 5 years, your outstanding debt is much lower.

choochoo Silver Member

choochoo

Posted
Posted (edited)

the problem isnt the inerest rate as much as the financially IRREspnsible familee. What are the chances more debt will be added that girl is expected to pay off..............................lol.?

She wants to get rid of the problem she needs to lose the family. I cant imagine what its like to pay off other peoples debts.

Edited by choochoo
micky plumb Rookie Member

micky plumb

Posted
Posted (edited)

The 1.75% rate is a "promotion" rate that most banks give when you a buy a house or a condo on a project. My friend got the same. I'm not sure wherever its the bank, or the customer that looses out in the end. Probably the customer.

7% is extortion anyway. If you buy a house on a 30 year plan, you will pay back the house at least two times.

Another problem with these kind of annuity mortgages is that the first few years, you are mostly just paying interests. Lets say after 5 years, you sell the house, and refinance the loan you will discover that you paid down only ~6% of the total balance, while you paid ~16% of the total installments. Thats why I always recommend people to do serial loans rather than annuity loans. Well, the installments are higher in the beginning, but after 5 years, your outstanding debt is much lower.

I fully agree, extortion to the nth degree, but borrowing money is expensive, I think we will end up paying for the loan plus 25% full term. My idea is to pay down the loan within 3 years and leave it is a peppercorn mortgage so that we keep the opening offer, keep the life insurance etc for the full term. I have not done the sums fully on this but I will when I can pay it off. We are contracted to keep the loan for a minimum of 3 years. In our case the loan was for a stand alone house from a Thai seller, not a project.

Hope the info helps others.

Edited by micky plumb
AnotherOneAmerican Ruby Member

AnotherOneAmerican

Posted
Posted (edited)

My wife has just been given a home loan based upon her "salary" I pay her every month and my own overseas salary.

The loan period given was for 10 years.

Interest rate is:

1.75% for the first year.

MLR (7%ish) minus 1.85% for 2nd year

MLR minus 1.5% for 3rd to 10th year.

The loan was given by Bangkok Bank. Branch was Pattaya Nua, near to Dolphin Roundabout. The Manageress couldn't have been more helpul.

It could be worth renegotiating the loan perhaps.

Cheers

What you mean with 1,75% for the first year?

She pays only 1,75% per year for the mortgage and 5,15% for the second year ?

Hard to believe.

I thought it was too much as well but those are the figures.

Too much ??

Did you notice that I mentioned 1.75% and 5,15% PER ANNUM?

Since another poster mentions that the MLR from Bangkok bank is 8,125%, that looks more like they gave you free money.

Or do I misunderstand this ?

I think Mickey has it wrong.

First year is usually discounted to around 2% (so 1.75% is feasible)

But they would have made her buy a 10 year life insurance costing the 5% she saved.

After that usually around 7% (so not sure he has the right figures for MLR)

Edited by AnotherOneAmerican
Pib Star Member

Pib

Posted
Posted

Fully believe the 1.75% starting figure quoted by micky plumb.

Currently for a Bangkok bank home loan interest rate is from 2.5% for the first year.

Actual rates depend on amount borrowed and options chosen.

Further info from Bangkok Bank (scroll down a bit for rates) http://www.bangkokbank.com/bangkokbank/personalbanking/dailybanking/loans/usefulinfo/Pages/Default.aspx

Just to add another reference to your post, below is a snapshot of the the Average Loans Rates of Thai banks as of 2 Oct 14...data from this Bank of Thailand webpage. But it does not include discount points to the basic mortgage rates like reflected the Bangkok Bank Mortgage Rates shown at ThaidDown above link. A person needs to visit banks to see what type of mortgage programs, promotions, etc., they have. Seems what the girl is paying now is well within the ballpark of current rates...and I'm assuming she may have got the mortgage years earlier when rates were higher.

post-55970-0-04976600-1412247481_thumb.j

worgeordie Star Member

worgeordie

Posted
Posted

Should have tried Wonga or others of their ilk, rates like 1758%+

She must not have worked out how much the repayments would be,

could she afford them,plus put food on the table,health costs,rent,

schools fees,travel expenses, on and on, no,its i want it,now.

regards Worgeordie

Jonmarleesco Gold Member

Jonmarleesco

Posted
Posted

Only if another bank has a different view of very long-term interest rates which, given they rely on futures markets' predictions, is unlikely over that long a term.

She might well get a lower rate with a shorter fixed term, but would probably have to pay a get-out fee.

AyG Platinum Member

AyG

Posted
Posted

The OP's friend is clearly in a difficult situation.

The real issue isn't about interest rates.

However, to get decent advice it would be most helpful if the OP were to state what the original loan was for. A 25 year loan is most unusual if it isn't for the purchase of land and/or property. And if it is, then the land/property could potentially be sold to repay at least part of the debt.

Simons3 Apprentice Member

Simons3

Posted
Posted

My wife has just been given a home loan based upon her "salary" I pay her every month and my own overseas salary.

The loan period given was for 10 years.

Interest rate is:

1.75% for the first year.

MLR (7%ish) minus 1.85% for 2nd year

MLR minus 1.5% for 3rd to 10th year.

The loan was given by Bangkok Bank. Branch was Pattaya Nua, near to Dolphin Roundabout. The Manageress couldn't have been more helpul.

It could be worth renegotiating the loan perhaps.

Cheers

What you mean with 1,75% for the first year?

She pays only 1,75% per year for the mortgage and 5,15% for the second year ?

Hard to believe.

I thought it was too much as well but those are the figures.

Too much ??

Did you notice that I mentioned 1.75% and 5,15% PER ANNUM?

Since another poster mentions that the MLR from Bangkok bank is 8,125%, that looks more like they gave you free money.

Or do I misunderstand this ?

My guess is the -1.85% got lost in translation and its actually MLR + 1.85% smile.png
Anthony5 Platinum Member

Anthony5

Posted
Posted

She is a gov worker and they are entitled to a loan up to paying back 100% of their salary a month in repayments!!!!

She works a second job to live off.

You mean it's common knowledge that government workers have backhanders on top of their salary that are big enough to live of.smile.png

cheeryble Platinum Member

cheeryble

Posted
Posted

]My guess is the -1.85% got lost in translation and its actually MLR + 1.85% smile.png

I don't think so.

I'd say the MLR is more or less an arbitrary....pretty high....figure used as an anchor so people can be attracted that they are offered less.

The real figure to relate to is the savings interest rate or bond rate offered by the bank.

Obviously they need running expenses but basically everything they get above this is gross profit.

(See another thread for savings rates)

Sent from my iPad using ThaiVisa app

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